The Fed Just Telegraphed Not To Expect Much If Anything From Bernanke's 3:45pm Speech

Is the Fed telegraphing that today's 3:45pm speech, expected by many to presage some form of monetary easing preannouncement
by the Chairman, will leave many disappointed? That could well be the
case based on the just disclosed data from the Fed's mouthpiece, Jon Hilsenrath, who spoke to Chicago Fed's Evans. In the interview, we find that the Fed president decided to cut its outlook (long overdue), but more importantly, Evans, a diehard dove and a big fan of additional easing, announced that he "doesn’t
want to add to [QE]." In other words, as we have been warning, the
S&P will have to drop at least another 25% before the "high
threshold" for more money printing is reached. Ironically, for the first
time, discounting even near certain future events does not work,
courtesy of Central Planning, which needs the market to act in a
centrally planned way and drop despite the inevitable Zimbabwe reaction.

Charles Evans, president of the Federal Reserve Bank of Chicago, is marking down his growth forecasts for 2011 and 2012, but says he isn’t prepared to call for new Fed actions to support the economy.

In an interview with The Wall Street Journal, Mr. Evans said he now expects the economy to grow by 3% to 3.25% in 2011 and 3.5% and 3.75% in 2012, compared to the 4% growth rate he was expecting before a recent string of disappointing economic data.

He said the recovery remains intact and that the damaging effects of recent shocks to growth – such as Japan’s earthquake and tsunami – should prove transitory.

The Fed later this month will conclude its $600 billion Treasury securities purchase program. Mr. Evans doesn’t want to add to it, but he also has no inclination to reduce the Fed’s portfolio of mortgage or Treasury securities any time soon, he said.

Mr. Evans was among the Fed’s more outspoken proponents of the Treasury purchase program. His comments suggest that there isn’t a strong base at the Fed right now for more monetary easing. Proponents of the Fed’s easy money stance might instead be focused on keeping the current policy in place for a long time.

What about Treasury yields? If the market REALLY doesn't expect the presses to start (I don't think it will ever be fully "priced out"), shouldn't the bluff be called by a nice fat 125 bp jump in the 10Y?

Oddly i can't help but wonder what happens if they actually raised rates (since ZIRP doesn't seem to be working). I know a mean reversion on TSY bonds, bankrupts the US (assuming it is not already bankrupt).

Bur for consumers, even investors. If money isn't cheap, and risk starts to get priced properly, and all those seniors who can't or won't invest in stock market, start getting decent yield again, what happens to the economy?

No just Zero Interest or hyper low long interest rates range, could perfectly be negative the long run of the curve. Thats the biggest threat for The Fed and G.20

Remember the 10yrs bonds is built with: (1 + Long term growth...which growth..the Public one?...cos Private has been exterminated in middle low classes) * ( 1+ 10yrs Inflation Expected)...which inflation????? More Printing¿ jajaja. US is not to big to fail, thats my statement. Be ready for a big protectionism age.

It would be great for the overall economy minus housing and the banks if interest rates were at 2 or 3%. The US economy needs to decouple from housing and large financial institutions. This will be difficult, but those 2 need to go through some serious pain to get better.

Actually, I think everyone realizes that JPM needs to keep the PMs below a certain point. Everyone is buying the dip, and trading the high point. Just more free money coming to us from JPM. Crumbs from the master's table, but delicious crumbs nonetheless.

It's just another way your stupid fucking masters are losing at their own game. They are stuck with no way out.

from the batmobile full of FRNs for banksters, batmanke's speech will focus on the strength of the dollar. don't laugh. i'm putting the over/under @ 7 mentions of a strong dollar, dollar support, the strength of the dollar, and so on.

Me: Thank you very much for your reply! Only one of my initial questions remains. Can the Federal Reserve lawfully purchase or sell Treasuries directly with the US government - ie not involve the primary dealers? Has this ever happened before in the history of the Federal Reserve?

LaBarbera: Yes, when proceeds are reinvested, the auctions are directly with the Treasury not primary dealers.

Ok so why is the fed buying bonds from primary dealers( large WS banks) who reap millions in profits every day from these activites, instead of purchasing them from the treasury directly and reinvesting in the treasury?! Blatant theft....PEOPLE HAVE A RIGHT TO AN EXPLANATION!!!!

Gay fashion technical support [for assless chaps and $30 t-shirts], on the other hand, does not remain intact...even though the abomination of the ETF world, the XRT, is intact this morning [dissonance that no one can see coming]. Arbitrage and equity vomiting into the gaping maws of ETFs as a method of wealth creation for criminal syndicate bankers...intact.

irrelevant to my point--which is that the stock market has no cause to plunge. it may shed a few more pounds, but corporations are not loaded with debt and cost cutting has been so steep, they are swimming in cash.

maybe you should read this and every other post/comments again. zh and everybody and their mother on this site feels there will be an imminent market crash, followed by the implementation of qe3. i disagree. i DONT disagree that our city of ice is sitting on a sheet 1/2 inch thick, but it doesnt stem from corporate vulnerabilities. my vote is no crash and no qe this year.

Not true. There are a lot of nuances on ZH. Yes, a majority probably believe that QE3 is coming, sometime. We just don't know what the hell it will be called, what form it will take, how big it will be, what the timing is, or what will be the trigger that gives Bernanke formal diplomatic cover.

While there are a lot of people that have said July 1st, the market will tank, there are just as many saying we'll have a slow decline, with the Treasury doing some sort of hijinks.

Corporate vulnerability is just one factor influencing the stock market. The stock market is about the future, and if companies are hoarding cash, and the GDP projections are being steadily revised lower (by MSM, Tyler and crew have been predicting this correctly for many months now), then this portends badly. Of course if the S&P is constantly judged on nominal terms, and we are printing money all the time, then it can be a big success (nominally) but a huge failure in real terms. Zimbabwe had a balls-out success in its stock market in nominal terms. Repriced in real money, like gold, the S&P is clearly tanking.

Investor sentiment is super bearish now, so it's possible we'll get a counter-rally. Nothing goes down in a straight line.

But the trend, my man, the trend is down. You can hear the hiss coming out of the balloon. The only thing propping us up is the fact that Europe is on the verge of "The French Revolution 2.0," and Japan is lining up their seniors to go into the hot zone and work directly on the Fukushima cores.

Yes, corporations are doing pretty well. But it'll be hard for them to survive without oxygen (i.e. cheap credit). Oh also rising input prices (inflation). Oh also persistently high unemployment (demand destruction).

"this thing" as in the s&p, which is comprised of large multinationals who are standing on their own feet. its not a mirage that starbucks is selling more coffee to the chinese, or that caterpillar is selling more equipment to india. of course nobody is hiring here, but thats capitalism. companies are doing more with less. bottom line is profit.

This "thing" has been providing some decent nominal returns, yes... I've been playing the game. But it has, and will, continue to lose in terms of gold. And it will do this at an increasingly faster pace.

Its been a commodity led run based on worldwide currency debasement tapping into the saver market in the east, and debt financed consumption in the west. Not sure I'd call business decisions made in the face of central planning, capitalism.

"Companies are doing more with less"

Sadly, automation in business will continue to prove profit is that bottom line... Hence why "nobody is hiring here" will continue. High unemployment is a guarantee here, as is Fed Assistance.

Ben 'Bubbles, Bananas & Bullion' Bernank, aka Shakey Twitching Lip McShakester, will announce inflation is transitory, employment is picking up, global commerce is healthy, the health of the banking system and credit conditions of sovereigns are fantastic, and there are green shoots everywhere, but that Fukushima has merely retarded the speed of their growth a bit.

If you don't believe him, just go ask anyone either a) still working at a TBTF bank or financial firm or b) working for the government.

and why should the stock market plunge? corporate earnings have not been dreadful...large corporations still making money from expansion into asia. many corporations from starbucks to mcdonalds to caterpillar are cash rich and doing ok. maybe we get another 5 to 10 pct slide in s&p, but that would be normal after the rapid rise over the past year. and there will be no qe3 this year or next.

Financial Repression! Many are talking about this and what the implications are. It has been used in the past 1930~1970 or so but today is different in one big way, Information network. People in past did not know what was happening, today many are just as stupid but many more are not. Take for example the average person on this page who can run circles around Obama without him even understanding, Why, because not only is Obama really stupid, but most of those around him are only slightly smarter.

In the past smart and intellegent people gravitated to government, but now days they gravitate away from government and only the stupid go into government. Same thing happened in Rome, USSR and many dead empires.

Everyone knows the game. The FED needs commodities to tank and stocks to go down just enough to have people scream, in unison, for the QE3 heroin.

Commodities will be bashed short term, but will return to their normally scheduled long term secular bull run. You can only keep the bouncing beach ball down for so long until it pops up.

Stocks are deflating on their own. They won't crash unless there's a panic. They'll just continue to leak without the money pumps to keep them inflated.

Companies are flush with cash because they aren't investing. Why invest if you don't believe the economy is recovering. Better to conserve your ammo and wait for the fire sale (or use your money for self-preservation).

Obama - "I'm not afraid of a double dip" == "I'm very afraid of a double dip, and it's all I talk about behind closed doors."

"Don't expect much from the FED speech today" == "Please don't dissect every word Ben says for clues and act on them. Because if you listen closely, you'll realize we are up shit's creek without a paddle, the same as happened during his last speech."

Multinationals are keeping their cash out of the US, those in the US with cash are looking for ways to hide and keep it safe. Investing in the US now is like buying a fancy home in Los Vegas, and with the current government no one is going to invest in the US.

That's funny, i thought ZH has been saying QE3 is a certainty all along. Now it's backtracking and stating only after a 25% drop in S&P will it be considered? Big fan of this site but you can't have it both ways Tyler.